#124AK 2Q 2018 Investor Presentation Alaska Air Group Alaska#2Safe harbor This presentation may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by any forward-looking statements. For a comprehensive discussion of potential risk factors, see Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2017, as well as in other documents filed by the Company with the SEC after the date thereof. Some of these risks include competition, labor costs and relations, general economic conditions, increases in operating costs including fuel, inability to meet cost reduction goals, seasonal fluctuations in our financial results, an aircraft accident, changes in laws and regulations and risks inherent in the achievement of anticipated synergies and the timing thereof in connection with the acquisition of Virgin America. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed therein. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on our business or events described in any forward-looking statements. We expressly disclaim any obligation to publicly update or revise any forward-looking statements after the date of this report to conform them to actual results. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and materially adverse.#3Our Vision and Strategy 3#4Our core values drive everything we do A J Own safety Do the right thing ནཊྛ Be Deliver kind hearted performance Be remarkable 4#51 We are executing our 2018 Plan across five focus areas 2 3 4 5 MORE FLIGHTS. MORE REWARDS. MORE TO LOVE. Virgin Deliver on the Integration Run a Safe & On-Time Airline Win Together With Our People Lead in Guest Satisfaction light Deals VISA Generate Financial Returns That Fund Our Future 5#6ALASKA Lihue. We have a long track record of successful growth Anchorage Honolulu Maui HAWAI'I Kona Vancouver CANADA Seattle Portland San Francisco/ Bay Area Salt Lake City Las Vegas Los Angeles Area San Diego Phoenix 63 destinations North-South orientation along West Coast Denver Minneapolis/ Saint Paul Boston Milwaukee Chicago Omaha Detroit Newark New York ⚫ Philadelphia Washington, D.C. Baltimore Indianapolis Colorado Springs Kansas City St. Louis Anchorage LASKA *Wichita Raleigh/Durham Nashville Oklahoma City Atlanta -Charleston Dallas Austin New Orleans • Orlando San Antonio Houston Intercontinental Tampa Fort Lauderdale Lihue Los Cabos MEXICO Guadalajara Cancun •Mexico City' Ixtapa/Zihuatanejo 2001 ⚫ Havana Liberia ⚫ San José COSTA RICA Honolulu Maui Kona HAWAI'I Vancouver Seattle Portland CANADA San Francisco/ Bay Area www City Chicago Salt Lake Denver Omaha Minneapolis/ Saint Paul Milwaukee Boston Detroit Newark New York Washington, D.C. Baltimore Philadelphia Indianapolis Las Vegas Colorado Springs Kansas City St. Louis Wichita Los Angeles Area Raleigh/Durham Nashville San Diego Oklahoma City Atlanta Phoenix Charleston Dallas Austin New Orleans Orlando San Antonio Houston Intercontinental Tampa Fort Lauderdale 115+ destinations National orientation with West Coast focus Los Cabos MEXICO Guadalajara Mexico City Ixtapa/Zihuatanejo 2018 Cancun Liberia COSTA RICA Havana San José SO 6#7Our growth model is simple but powerful Be Relevant - Fly When & Where Customers Go Add Gauge, Frequency & New Routes L I.D. POWER SALTSP ISFACTIO ID.POWER NORTHWEST • SOUNDS BANK ID POWER BEST TRAVEL REWARDS &WORLD REPORT US.News AIRLINES 2017-2018 Build Loyalty - With Leading Service & Generous Rewards Offer Low Fares Enabled By Low Costs 7#8History has also shown that passengers prefer low fares and a premium experience Net Change in Seats by Airline Segment 2000 to 2017 22M Industry 37M 32M (75M) 30M ULCC LCC Premium Value spirit Network American Airlines A DELTA UNITED allegiant FRONTIER AIRLINES airlines Southwest AlaskaⓇ jetBlue HAWAIIAN AIRLINES 8#9Alaska offers fares that are ~20% lower than the legacy carriers and in line with LCCS $191 $196 $201 $146 $146 $155 jetBlue Alaska. Source: U.S. Department of Transportation, 12 months ended Q3 2017 North American Origin and Departures (stage-length adjusted to industry average stage length of 1,146) A 9#10Meanwhile, our product is elevated and differentiated 1 Alaska Blue Mood Lighting Comforting look & feel for the cabin 41" First Class Seat 35" Premium Class Seat Satellite Connectivity Free Movies and Chat New First and Premium Class Seats Fresh, Regional Food & Beverage Offerings ...and our customers will see a series of product upgrades over the next 18 months 10#11We are creating an airline people love Alaska AIRLINES ○ = West Coast seat share Customer Experience* *includes customer service quality, pre- and in-flight amenities, upgrade frequency, loyalty benefits, etc. Fares from U.S. Department of Transportation; seat share reflects U.S. West Coast-originating flights to N. American destinations Affordable Fares jetBlue spirit 11#12Integrating Our Airlines 12#13We've made significant progress integrating Alaska and Virgin MORE FLIGHTS. MORE REWARDS. MORE TO LOVE. Single Passenger Service System Single Operating Certificate from the FAA Integrated Revenue Management Single guest loyalty platform Virgin Single HR, Finance and Payroll systems Merged all airport stations Invested in Culture (held 24 Momentum Sessions) Status 13#14Our overall integration timeline is tracking well against other recent airline mergers Alaska UNITED Continental Airlines SOUTHWEST Key milestone schedule ▲ Delta AA (Number of months from deal close) AmericanAirlines Virgin america nwa airTran U'S AIRWAYS Single Passenger Service 16 months 1st System (PSS) 16 months 17 months 43 months 22 months Single website 16 months 1st 16 months 17 months 42 months 22 months Full codeshare At close 1st 2 months 11 months n/a 3 months Frequent Flyer Program (FFP) integration 13 months 2nd 12 months 17 months 42 months 15 months Single Operating Certificate 13 months 2nd 15 months 13 months 10 months 16 months Single operations center (OCC) 15 months 3rd 6 months 12 months n/a n/a Note: *Status match for Elevate members into Mileage Plan at 1 month; AS elites recognized on VX metal at 8 months; full elite benefits reciprocity at PSS (~16 months); all figures +/- 1 month due to rounding 14#1585% of our integration milestones will be complete by June 2018 Integration Cumulative Milestone Completion (2016-2020) Percent 100% 90% 80% | Important milestones remain post-2018 (e.g., Airbus fleet retrofit) June 2018 PSS - April 2018 40%+ of integration milestones achieved during the first half of 2018 70% 60% 50% Q1 2018 40% 30% 20% 10% 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 2016 2017 2018 Q3 ठ Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2019 2020 15#16Our successful PSS transition was the primary milestone to unlock our ability to capture synergies On April 25, we transitioned to a single brand, guest experience, and Passenger Service System 2 Alaska Virgin America america Alaska April 24th Alaska Operating with a single PSS enables us to capture the majority of the merger synergies Annual synergies (revenue & cost) expected from Virgin America integration $300M $255M $195M ill Alaska Alaska $65M $36M April 25th ...with zero disruption to our operation 2017 2018 2019 2020 2021 Synergy capture remains on-track vis-à-vis our expectations at the time of the acquisition 16#17deli Our Combined, West Coast Network 内田 17#18Virgin America gave us expanded reach, and we added 44 new routes to Virgin's foundation last year ANCHORAGE SEATTLE PORTLAND -> SAN FRANCISCO BAY AREA LOS ANGELES AREA Lihue Honolulu Maui Konal Vancouver Vancouver SEATTLE PORTLAND Minneapolis Salt Lake City Milwaukee Omaha Chicago Boston Newark Detroit SAN FRANCISCO Denver Kansas City Indianapolls New York Philadelphia Baltimore Washington DC ANCHORAGE BAY AREA as Vegas LOS ANGELES AREA SAN DIEGO Witchita St. Louis Oklahoma City Raleigh/Durham Nashville Atlanta Charleston Omaha Salt Lake City Denver Kansas City Indianapolis Minneapolis Boston ANCHORAGE Milwaukee Newark Detroit New York Chicago Philadelphia Baltimore Washington DC Vegas Witchita Oklahoma City St. Louis Raleigh/Durham Nashville Atlanta Charleston Dallas Austin San Antonio Houston New Orleans Tampa Orlando Lihue Fort Lauderdale Honolulu Maui Kona SAN DIEGO Phoenix Los Cabos Mexico City Guadalajara Cancun Ixtapa/Zihuatanejo Liberia San Jose Pre-deal Alaska network: ~240 routes Vancouver SEATTLE S PORTLAND SAN FRANCISCO BAY AREA LOS ANGELES AREA SAN DIEGO Dallas Austin San Antonio Houston New Orleans Tampa Lihue Orlando Fort Lauderdale Honolulu Maui Kona Los Cabos Mexico City Guadalajara Cancun Ixtapa/Zihuatanejo Liberia San Jose Minneapolis Milwaukee Detroit Chicago Salt Lake City Omaha Las Vegas Denver Kansas City Indianapolis Boston Newark New York Philadelphia Baltimore Washington DC Raleigh/Durham Phoenix Witchita St Louis Oklahoma City Nashville Atlanta Charleston Dallas Austin San Antonio Houston New Orleans Tampa Orlando Fort Lauderdale Los Cabos Mexico City Guadalajara Cancun Ixtapa/Zihuatanejo Liberia San Jose Post-deal network including Virgin: ~280 routes Combined Networks + New Markets: ~320 routes In 2018, Alaska operates a national network serving 115+ destinations from seven hubs along the West Coast 18#19Seven West Coast cities anchor our route network today Alaska maintains a significant leadership position in the Pacific Northwest Post-Virgin, Alaska holds the #2 position at most hubs in California, a solid platform for future growth ANC Domestic Seat Share Anchorage, AK ~45 ALK Daily Departures 64% Pop. -4x PNW SFO Domestic Seat Share 47% ~90 ALK Daily Departures 17% 10% 13% 11% United Alaska American Alaska. Ravn SJC Domestic Seat Share Delta SEA Domestic Seat Share 54% ~35 ALK Daily Departures 51% 17% 11% Seattle, WA San Francisco Southwest Alaska. Delta ~300 ALK Daily Departures 21% San Jose 8% Alaska. Delta Southwest PDX Domestic Seat Share Portland, OR 45% ~125 ALK Daily Departures 19% 12% Alaska Southwest Delta ~80 ALK Daily Departures Los Angeles San Diego ~40 ALK Daily Departures LAX Domestic Seat Share ALK ranks #5 with 11% share in this strategic and fragmented market SAN Domestic Seat Share 41% 13% 13% Southwest Alaska. American 19#20We now offer the highest customer relevance in the industry for West Coast passengers Relevance on the West Coast 2018 47% 38% 37% 34% 30% #1 Passenger Relevance on the West Coast San Francisco 13 New Destinations San Jose 3 New Destinations LA Basin 5 New Destinations San Diego 8 New Destinations 29 New California Markets in 2017 *Data reflects mid-year 2018 schedules; Relevance is percent of North American O&D passengers in markets that each carrier serves with nonstop service Alaska. 20 20#21Our network is more diverse geographically due to our expanded presence in California 2013 Network Composition 2018 Network Composition 12% 13% ■ Other ■ Other 3% -4% 10% 12% Midcon/ 2% East Coast 8% Midcon/ East Coast 15% HI HI 25% AK AK CA CA 54% 42% PNW PNW ~825 Departures Per Day ~1,200 Departures Per Day 21#22Our alliance partners extend our network to more than 900 destinations globally KOREAN AIR 海南航空 HAINAN AIRLINES SINGAPORE AIRLINES CATHAY PACIFIC JAL 2.4m 6.4m 12.0m QANTAS FIJI AIRWAYS LATAM AIRLINES Single PSS system connects our global partner network to our new CA hubs Alaska GLOBAL PARTNERS FINNAIR ICELANDAIR BRITISH AIRWAYS → Condor Aer Lingus Emirates Intl Partners SEA SFO LAX Partners 6 12 12 Departures 7 15 25 Intl Enplanements 2.4M 6.4M 12.0M * International enplanement figures are YE Aug 2017 totals published by airports 22#23ETOPS 493-900ER MORE TO LOVE 00000000000000000 000 N493AS ככככככככפ ם ננננננננ פ כ כ כקלככט נ כככככ Alaska+vignamerica KF1BF1→ Our Enhanced Customer Proposition 23#24Our award-winning customer service enables us to develop long- term relationships with our guests Running a great airline leads to consistent recognition and awards... ...and a happy, loyal customer base Alaska #1 Traditional Carrier 10 straight years Virgin Best Domestic Airline 10 straight years Condé Nast Traveler TRAVEL+ LEISURE Net Promoter Score 66.0% 66.0% 64.0% 59.0% 2015 2016 2017 2018 YTD 24#25...and our broader brand vision is attracting new customers HOSPITALITY Alaska Brand Awareness 85% 72% 42% 32% PNW CA Alaska Brand Health Report, Jan 2018 n 4Q 2016 Warm & welcoming with a modern, West Coast-inspired vibe ■ 4Q 2017 PERSONALITY California Brand Rankings Brand Awareness #1 Southwest #2 United Brand Preference Southwest Alaska #3 Delta Delta #4 Alaska United 25 25#26We are innovating on the customer experience to appeal to a broader West Coast audience PISTOLS Single entertainment platform Satellite WiFi on first aircraft (full fleet roll-out by 2020) Refreshed food & beverage program on all aircraft Designer uniform and upgraded cabin experience roll-out (2019) 2018 2019 2020 & Beyond Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ongoing product & customer experience innovation New JFK Airport Lounge First Airbus with renovated cabin (full roll-out by 2020) Beyond Bound *Current timeline as of March 2018. Selected milestones only. Milestone timing subject to change. Expanded SEA airport presence and flagship lounge (mid-2019) 26#27Our Mileage Plan and credit card programs build additional customer engagement and develop high value guest relationships Mileage Plan Members: 4X more revenue 65% more likely to book direct 30% have a credit card Confirmation Trips + San Francisco, CA > Confirmation Seattle, WA Mileage Plan Alaska 4264 1234 CHRIS LAR 27#28Our loyalty program is the best in the industry and offers the most generous benefits Mileage Plan • Miles for miles • Low redemption prices Fastest path to elite Earn & redeem miles on Credit Card Alaska AIRLINES Top Loyalty Program Annual Fee BEST TRAVEL REWARDS US.News AIRLINES 2017-2018 ▲ DELTA American Airlines UNITED Southwest❤ $75 $69-$99 Companion Certificate $99 × Global Partners Complimentary Upgrades for elites Miles on Airline Spend 3X 2X 28 28#29Growth in our loyalty programs far exceeds our passenger growth and has accelerated since the Virgin acquisition 17% CAGR Mileage Plan Membership 10% CAGR Affinity Cardholders 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Alaska Mileage Plan Virgin Elevate Mileage Plan and Affinity Cardholder growth outpaces system average in California *Includes Virgin Elevate members 20 29#30Total Rev Our credit card programs are growing and delivered ~$1 billion in cash flow last year Mileage Plan revenues have consistently grown far in excess of passenger growth... Total Mileage Plan Revenues ...and related affinity credit card programs generate substantial annual cash flow for the airline Alaska. Mileage Plan +86% 2013 2014 2015 2016 2017 % of 9% 10% 11% 12% 11% 4000 1234 5678 9123 CHRIS L MARTIN 1234 00/00 VISA Signature ~$1 billion in cash flows from card programs in 2017 30 30#31We are also targeting $150M in revenues from initiatives in 2019 Our new "Saver Fare" product will offer guests more choice with greater benefits than Basic Economy We will also implement a series of accretive revenue management changes later this year Alaska ▲ DELTA AIRLINES American Airlines UNITED Offering Exit Rows for sale ✓ XXX Better managing revenue post-sale Seat Assignment Carry-On Bag Delta-only Ability to Change / Cancel × x Rewards Accrual Mileage- based Spend- based $100M annual run-rate by 2019 Dynamic Pricing for Premium Class Eliminating fee waivers for ticket changes outside of 60 days $50M annual run-rate by 2019 31#32Our Cost and Operations Advantage Alaska 32#33Our efficient cost structure is a competitive advantage West Coast Seat Share²: Stage-Length Adjusted Total CASM1 10.79 C 10.86 C 9.64 C 8.30 C 7.28 C spirit airlines allegiant 2% 1% 23% 1. Trailing 12-Months Ended 3/31/18 2. U.S. West Coast-originating flights to North American destinations Alaska. jetBlue 13.72 C 12.99 C 12.69 C 24% 3% 13% 12% 16% 33#34Our low costs have historically been underpinned by industry- leading operational performance On-time performance led the industry for 7 years prior to the Virgin acquisition; 2018 is "back to normal" Alaska only Alaska + Virgin America Completion rate has also been strong for many years relative to competitors Alaska only Alaska + Virgin America 87.0% 86.1% 86.4% 87.3% 99.5% 99.5% 99.5% 86.5% 99.4% 79.1% 99.2% 79.7% 80.2% 79.1% 78.3% 76.6% 76.4% 98.8% 98.7% 98.6% 99.3% 99.0% 98.2% 97.9% 2013 2014 2015 2016 2017 2018 YTD 2013 2014 2015 2016 2017 2018 YTD ALK -Industry 1 ALK-Industry 1 1. "Industry" includes AAL, DAL, UAL, LUV, JBLU, SAVE 34#35A young, fuel-efficient fleet also supports a lower cost structure Mainline Fuel Efficiency Average Fleet Age Years ASMs per gallon, Trailing 12 Months 86.5 81.0 75.5 74.1 72.9 70.6 70.2 68.3 66.2 Spirit Alaska Southwest Allegiant Hawaiian JetBlue United American Delta Data as of 3/31/18 5.1 11.4 10.7 10.1 9.2 7.9 14.3 -19 16.7 Spirit Alaska Jetblue American Southwest Hawaiian United Delta Allegiant Data as of 12/31/17 35#36Our relative cost advantage remains substantial despite marking our pilot pay scales to market in 2018 9.16¢ ALK Total CASM excluding Fuel 10.82¢ 10.69¢ 8.51¢-8.56¢ Stage-Length Adjusted CASMx – ALK vs. Legacies ALK Legacy Carriers ALK 18% advantage ALK 20% advantage I I I I 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2012 2013 2014 2015 2016 2017 2018F ALK CASMX ALK at Industry CASMX Growth ALK at LCC CASMX Growth 36 36#37Underlying CASMx guidance is flat for 2018 when looking beyond the unique headwinds and tailwinds we face this year 2018 CASMx Guidance – Key Drivers 3.5% -2.9% -0.5% -0.1% -1.2% 1.0% 2018 CASMx Guidance Labor Deals (Pilots + FAs) MCPH Deal Impact of Regional Mix 2017 Ops Issues Tailwind Underlying 2018 CASMX 37#38Capital Deployment Plan க 8T 880 St 38 88 N563AS www#39Going forward, we will continue to invest in our fleet and product... $1.0B ~$1.0B ~$750M ~$750M 2017 2018F 2019F 2020F ...though we are reducing our spend as we optimize our post-acquisition network and capture deal-related synergies 39 39#40Our balance sheet is improving... Alaska Air Group Debt-to-Cap (%) 81% 67% 54% 27% Virgin Target 59% * 53%* 50% I I Mid 40s 2008 2010 2012 2015 2016 2017 *51% before adoption of new accounting standards 2018F 2020 Long-term leverage target consistent with other high-quality industrials 40#41...and our leverage remains one of the lowest in the industry 104% Long-Term Debt to Cap % Quarter Ended 3/31/18 67% 64% 63% 53% 41% 32% 26% allegiant spirit airlines Alaska. jetBlue 41#42Our commitment to growing the dividend and returning capital to shareholders displays our confidence in the business Annual Dividend Spend ~$158 $148 $136 $102 Increased dividend each year since inception 220% 32.0¢ $28 $68 2015 2016 2017 2018F 2013 In millions, except per share values 2014 Dividend initiated in August 2013; spend subject to Board approval 10.00 2013 2018 We also plan to repurchase $50M in stock in 2018 42#43224 We are creating an airline people love The integration is tracking well; 85% of milestones complete by June 2018 Our combined platform offers the most seats and #1 customer relevance on the West Coast Our growth is slowing in 2019-2020 as we realize synergies and optimize our network We remain committed to generating strong ROIC and to returning capital to shareholders 43